Cain Company and Abel Corporation Have the Following Income Statements

question 69

Multiple Choice

Cain Company and Abel Corporation have the following income statements for the current year: $$\begin{array} { l r r } & \text { Cain Company } & \text { Abel Corporation } \\\hline \text { Sales } & \$ 50,000 & \$ 50,000 \\\text { Variable expenses } & 10,000 & 25,000 \\\text { Contribution margin } & \$ 40,000 & \$ 25,000 \\\text { Fixed expenses } & 25,000 & 10,000 \\\text { Operating income } & \$ 15,000 & \$ 15,000\end{array}$$ What is the degree of operating leverage for Cain Company for the current year?

• A)2.667
• B)0.375
• C)1.667
• D)1.250

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Definitions:

Dependence

A state in which there is a physical or psychological compulsion to take a substance or engage in an activity, often leading to addiction.

Anabolic Steroids

Synthetic substances similar to the male hormone testosterone, used to increase muscle mass and strength, often with harmful health effects.

Muscle Mass

The total amount of skeletal muscle in the body, important for physical strength, metabolism, and overall health.

Body Fat

The portion of an individual's body that is made up of fat cells, vital for energy storage, protection of internal organs, and regulation of hormones.